Windows' error- and crash-reporting system sends a wealth of data unencrypted and in the clear, information that eavesdropping hackers or state security agencies can use to refine and pinpoint their attacks, a researcher said today.

Not coincidentally, over the weekend the popular German newsmagazine Der Spiegel reported that the U.S. National Security Agency (NSA) collects Windows crash reports from its global wiretaps to sniff out details of targeted PCs, including the installed software and operating systems, down to the version numbers and whether the programs or OSes have been patched; application and operating system crashes that signal vulnerabilities that could be exploited with malware; and even the devices and peripherals that have been plugged into the computers.

"This information would definitely give an attacker a significant advantage. It would give them a blueprint of the [targeted] network," said Alex Watson, director of threat research at Websense, which on Sunday published preliminary findings of its Windows error-reporting investigation. Watson will present Websense's discovery in more detail at the RSA Conference in San Francisco on Feb. 24.

Sniffing crash reports using low-volume "man-in-the-middle" methods -- the classic is a rogue Wi-Fi hotspot in a public place -- wouldn't deliver enough information to be valuable, said Watson, but a wiretap at the ISP level, the kind the NSA is alleged to have in place around the world, would.

"At the [intelligence] agency level, where they can spend the time to collect information on billions of PCs, this is an incredible tool," said Watson.

And it's not difficult to obtain the information.

Microsoft does not encrypt the initial crash reports, said Watson, which include both those that prompt the user before they're sent as well as others that do not. Instead, they're transmitted to Microsoft's servers "in the clear," or over standard HTTP connections.

If a hacker or intelligence agency can insert themselves into the traffic stream, they can pluck out the crash reports for analysis without worrying about having to crack encryption.

And the reports from what Microsoft calls "Windows Error Reporting" (ERS), but which is also known as "Dr. Watson," contain a wealth of information on the specific PC.

When a device is plugged into a Windows PC's USB port, for example -- say an iPhone to sync it with iTunes -- an automatic report is sent to Microsoft that contains the device identifier and manufacturer, the Windows version, the maker and model of the PC, the version of the system's BIOS and a unique machine identifier.

By comparing the data with publicly-available databases of device and PC IDs, Websense was able to establish that an iPhone 5 had been plugged into a Sony Vaio notebook, and even nail the latter's machine ID.

If hackers are looking for systems running outdated, and thus, vulnerable versions of Windows -- XP SP2, for example -- the in-the-clear reports will show which ones have not been updated.

Windows Error Reporting is installed and activated by default on all PCs running Windows XP, Vista, Windows 7, Windows 8 and Windows 8.1, Watson said, confirming that the Websense techniques of deciphering the reports worked on all those editions.

Watson characterized the chore of turning the cryptic reports into easily-understandable terms as "trivial" for accomplished attackers.

More thorough crash reports, including ones that Microsoft silently triggers from its end of the telemetry chain, contain personal information and so are encrypted and transmitted via HTTPS. "If Microsoft is curious about the report or wants to know more, they can ask your computer to send a mini core dump," explained Watson. "Personal identifiable information in that core dump is encrypted."

Microsoft uses the error and crash reports to spot problems in its software as well as that crafted by other developers. Widespread reports typically lead to reliability fixes deployed in non-security updates.

The Redmond, Wash. company also monitors the crash reports for evidence of as-yet-unknown malware: Unexplained and suddenly-increasing crashes may be a sign that a new exploit is in circulation, Watson said.

Microsoft often boasts of the value of the telemetry to its designers, developers and security engineers, and with good reason: An estimated 80% of the world's billion-plus Windows PCs regularly send crash and error reports to the company.

"We've substantiated that this is a major risk to organizations," said Watson.

Error reporting can be disabled manually on a machine-by-machine basis, or in large sets by IT administrators using Group Policy settings.

Websense recommended that businesses and other organizations redirect the report traffic on their network to an internal server, where it can be encrypted before being forwarded to Microsoft.

But to turn it off entirely would be to throw away a solid diagnostic tool, Watson argued. ERS can provide insights not only to hackers and spying eavesdroppers, but also the IT departments.

"[ERS] does the legwork, and can let [IT] see where vulnerabilities might exist, or whether rogue software or malware is on the network," Watson said. "It can also show the uptake on BYOD [bring your own device] policies," he added, referring to the automatic USB device reports.

Microsoft should encrypt all ERS data that's sent from customer PCs to its servers, Watson asserted.

A Microsoft spokesperson asked to comment on the Websense and Der Spiegel" reports said, "Microsoft does not provide any government with direct or unfettered access to our customer's data. We would have significant concerns if the allegations about government actions are true."

The spokesperson added that, "Secure Socket Layer connections are regularly established to communicate details contained in Windows error reports," which is only partially true, as Stage 1 reports are not encrypted, a fact that Microsoft's own documentation makes clear.

"The software 'parameters' information, which includes such information as the application name and version, module name and version, and exception code, is not encrypted," Microsoft acknowledged in a document about ERS.

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